November 13, 2025 • 41 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian dive into the all-too-common portfolio "Frankenstein"—a scattered mix of accounts with zero strategy. They lay out the fixes, from consolidation to coordinated tax planning. They also explore how too much cash can drag down your returns, when DIY investing becomes an SOS moment, and how overlooked tax traps silently siphon wealth. Plus, they tackle 50-year mortgages, blurred lines between investing and gambling, and how Google profits from your personal data—along with how to push back.
From ETF overlap and buffered products to tax-efficient investing strategies for high-net-worth households, it’s a jam-packed episode full of insight.
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Episode Transcript
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Speaker 1 (00:00):
Sell button pushed to get all the news you need
to keep you informed. Fifty five krs the talk station.
Speaker 2 (00:15):
Tonight, cleaning up a portfolio mess, a somewhat blurred line
now between investing and gambling, and your questions get answered.
You're listening to Simple Money, presented by all Worth Financial
on Bob spond Seller along with Brian James.
Speaker 3 (00:29):
You've worked hard, you've.
Speaker 2 (00:30):
Saved and invested, but your portfolio might not be in
as good a place as possible, or might be somewhat
pack sufficient. Tonight, we're gonna walk through several scenarios or
examples of situations we run across from time to time
and attempt to clean some of those up with some
good advice.
Speaker 3 (00:49):
Ryan.
Speaker 2 (00:50):
Let's start off with scenario one, something we'll call the
Frankensign Frankenstein portfolio.
Speaker 3 (00:56):
Too many accounts and not nearly enough strategy.
Speaker 4 (01:00):
Just like the monster, this portfolio is made out of
the parts box, just a bunch of stuff bolted together
with really no strategy, no rhyme or reason in indicating
why things are there.
Speaker 3 (01:11):
So this is an investor who has done a pretty
good job saving.
Speaker 4 (01:13):
Obviously, you got to build that parts box somehow, maybe
rolled over some four O one k's open diras along
the way at tax time. Got a brokerage account here,
another brokege account over there, maybe a robo advisor, are
going to try that out for a little while, all
over the place, really nothing coordinated. The risk here is
that your investments are kind of overlapping and a lot
of unintentional overexposure because you might have the same thing
(01:33):
across all these accounts, and literally zero tax coordination. Because
of all these taxable type accounts, somebody has to be
paying attention to which one is doing what, or you
run the risk of wash sales and when you're trying
to tax loss harvest, as well as again redundant dividends
and things paying in more than one place, spinning out
multiple ten ninety nine, also often paying more and fees
(01:56):
or taxes than necessary. So for example, a fee based
account if you got that involved in those roboadvisor type accounts,
but generally the more that is managed there, the lower
that fee goes. So there's not a whole lot of
sense in scattering things all over the countryside. So the
fix here for this Frankenstein portfolio is to consolidate as
you can figure out where where the different accounts are
(02:17):
that are similarly titled. All of your I rays can
collapse into one, Your roth irays can collapse into one. Jointly,
taxable accounts or tax accounts that are individually titled all
can be lumped into one. And think about the whole
pile holistically, right, boil it down to specific goals, whether
that there might be retirement income, perhaps it's legacy planning,
or maybe it's just plain growth if you're in that
(02:38):
phase of life. Make sure that allocation across all of
them is intentional, not just a bunch.
Speaker 3 (02:43):
Of stuff all smushed together. So Bob tell us about this.
Speaker 2 (02:46):
There's a huge difference between having a collection of products
and having an actual investment and tax strategy. Huge difference.
Sometimes people feel like they're diversified. It feels great having
things spread out all over, you know, you know what's
half acre, but a lot of strategy can be lacking there,
and more importantly, a.
Speaker 3 (03:06):
Lot of opportunity.
Speaker 2 (03:07):
It's overlooked in those what we'll call Frankenstein portfolios.
Speaker 3 (03:11):
Didn't mean to interrupt, Brian.
Speaker 2 (03:13):
Let's move on to scenario number two, which is the
opposite of what we just talked about. That cash drag,
too much cash and again too little strategy. Talk about
what gets people into this cash drag situation.
Speaker 3 (03:26):
It's usually a windfall, Bob.
Speaker 4 (03:28):
So maybe somebody sold a business or inherited a lump sum.
Those are the two types of things that cause us
to receive a big pilot cash most frequently, or perhaps
there's lottery winners that kind of thing. These kinds of
things do happen to be out there, and oftentimes this
money lands in a bank account, which forces somebody to
make a decision that's different from my four oh one K,
my iras or whatever, where I had to make an
(03:50):
investment choice along the way, and that's been set for years,
if not decades. Well, is a pilot cast dropped out
of the sky. And the feeling that people tend to
get is, Okay, I need to protect this. This has
to be hoarded. I need to have that never had
this much cash in my life. I should sit on it.
And that's never going to be the right answer, right that.
The right answer is figure out what your needs are.
So because the more you have sitting in cash, the
(04:11):
more you're going to lose in purchasing power. I frequently
run into people who have this pile of cash, and
then their first complaint is about inflation, which nobody's happy
with inflation at the moment. But if you're consciously sitting
on a pile of cash and you're you're aware that
inflation is an issue, well, you are literally shooting yourself
in the foot because you are actually proactively pursuing the
(04:32):
problem that inflation is, which means the cost of things
outgrows your money, so you're missing out on market growth.
And also this does bring in emotional decision making. I've
got this pile of cash and I'm so scared to
lose any of it, so I shouldn't invest it.
Speaker 3 (04:44):
I should just sit on it.
Speaker 4 (04:45):
And we wind up with five times the amount we
actually need and something that is basically an emergency fund.
So what's the fix to this, Well, we want to
build a plan to redeploy that strategically. That can mean
once you've determined what's the right amount I should invest right,
and there's almost always things that's screaming for case, maybe
it is your emergency fund that has always needed some attention.
Figure out what that should be, carve it out. It's
(05:05):
perfectly fine for that to stay in cash or better
a high yield savings account, and then beyond that, figure
out what bills you have come and do over the
next twelve to twenty four months. If you're going to
have to buy a car, maybe do something to the house,
or there's a wedding coming up for a kid something
like that, well that's great. Put that in the CD
and timement for whatever whatever's left. Beyond that, figure out
the rest of it is just long term money. If
(05:27):
you can't identify a goal for it, it must therefore
be long term. Now you've figured out how much you
can invest, and you can decide how you want to
enter the market. Dollar cost averaging is a great way
if you're super concerned about getting in right before the
market takes a dip. Frequently that doesn't happen, so it
can be just as successful to go ahead and pull
the trigger on it. But again, figure out which job
each individual dollar has in there and act accordingly.
Speaker 3 (05:51):
All right, let's talk about a third scenario.
Speaker 2 (05:53):
When DYI turns into so os the do it yourself
for and we run into these kind of folks you know,
I won't say often, but once in a while, Brian
folks that have been managing their own money, maybe for decades,
and they've done well. They've stayed disciplined, they've stayed in
the market. Market's done well. We talk about that all
the time. But now the portfolio is a bit more complex.
(06:17):
Maybe you're nearing retirement, maybe you're staring at rmds coming
up missing out, or don't know how to properly evaluate
roth conversions. You know, sometimes these dy folks have zero
state planning considerations in their plan whatsoever. It's no longer
just about picking a few good mutual funds. Things have
(06:37):
gotten more complex as things have grown.
Speaker 3 (06:40):
And the risk here is just flat.
Speaker 2 (06:42):
Out missed planning opportunities, tax inefficiencies, emotional investing, staying tied
to things that maybe you inherited or just have owned
for forty years. And the fix here is considering at
least some professional management, at least a second set of eyes,
especially as your wealth grows. Small mistakes or small omissions
(07:04):
can get very, very expensive, and a good fiduciary advisor
can help you optimize across the board from a tax standpoint,
income strategy, charitable get giving, and legacy planning. And Brian,
what I want to add here, because I've had several
meetings like this over the last couple of years. Folks
come into our office or meet with, you know, let's
(07:25):
face it, other good fiduciary advisors here in our area,
and they come in with the assumption that you won't
work with me unless I hand over every penny of
my entire net worth, And that's not true. A good
fiduciary advisor will will add some of the planning opportunities
that we're talking about here and still giving clients the
(07:46):
opportunity to still self manage some of the money that
they want to continue to manage. And what I always
tell people at the beginning of a relationship is, hey,
let's date before we get married. Let's let us prove
to you, you know, the value add that we can add,
you know, to your situation by doing the comprehensive planning.
You don't have to hand it all over to us
(08:07):
at once. Let us earn our keep over time, and
let you be the judge on whether it makes sense
to continue to self manage some or all of your money.
But a second set of eyes here can really add
a ton of value to people's situation.
Speaker 4 (08:22):
Yeah, and I think going along with what we were
talking about earlier with the you know that holistic financial
planning approach. And I've had a meeting very recently with
somebody who's had a bit of a windfall and there's
an enormous amount of money that's kind of dropped out
of the sky from a from the sale of a business,
and they have never gotten around to doing any financial planning.
So all of a sudden, the simple will that they
(08:43):
didn't even have isn't enough for their estate plan. But
all there's a lot of dollars there that currently are
a little bit exposed because there's just nothing in place
should one of them get hit by bus. So we're
working on that right now. But that's how quickly life
is sneaking up on people.
Speaker 2 (08:56):
Let's let's get into this scenario that i'll call the
silent tax leak. You've got dividend paying funds, you know,
in taxable accounts. You've got no idea what tax loss
harvesting even is, to say nothing of having it deployed
in your portfolio. Maybe you're even triggering short term gains
without realizing it. And the risk here, obviously is you're
(09:17):
giving up more money to Uncle Sam than you need to,
not taking advantage of smart tax strategies. So obviously the
fix here is revisit your allocation. Put tax inefficient investments
in tax sheltered accounts like iras, use things like direct indexing,
maybe some municipal bonds or ets to reduce the tax
(09:39):
drag on your portfolio. In other words, be intentional about
when and what you sell to create the cash flow
and income that you need.
Speaker 3 (09:50):
Yeah, and so here's another one. Let's change the path
here a little bit too.
Speaker 4 (09:53):
So we talked about this a little bit before, inherited
wealth and inherited problems. So this is a scenario where
you didn't really have any.
Speaker 3 (10:01):
Control over what you own. It dropped out of the sky.
Speaker 5 (10:03):
You know.
Speaker 4 (10:03):
Maybe you've got a portfolio that grandma and grandpa had
and they've since passed on, and you've inherited those stocks
and those mutual funds and things in kind. Works great
for your parents or your grandparents, but it's not what
you would have picked. So this is where you got
to be kind of careful. People tend to sit on
this and they go, well, it's good enough for grandma
and grandpa. I'm gonna leave it alone for a little while.
And then I'll change it, and then what happens is
they'll they'll finally get around a couple of years later,
(10:25):
maybe later, maybe longer than that, to figuring out what
they want that portfolio look like for themselves. They could
have done that years ago when they had just received
they step up in cost basis, meaning they could have
pulled the trigger to rejigger that portfolio relatively quickly. But
now they've waited a few years and there are gains
packed into it, and maybe it's a super conservative portfolio
that they wouldn't have wanted to own because they are
(10:46):
a younger, more growth oriented investor.
Speaker 3 (10:48):
And that's great, that's fine.
Speaker 4 (10:50):
But now because they are a little bit of gains,
especially with the markets done over the last couple three years,
you're gonna have to pay taxes to make that mean
you still have a game.
Speaker 3 (10:57):
More money is just more money.
Speaker 4 (10:58):
But if that's one thing where I would urge people
to move a little more quickly when you inherit in
kind a bunch of investments, be thoughtful about earlier on
about what you want that to look like. Don't push
it out there. Just because it's already invested doesn't mean
it was invested for you. It was invested for someone
who is not around, and the situation doesn't exist anymore,
and if you let it go too long, it may
be a little more costly to rejigger it to what
(11:20):
you want to see.
Speaker 2 (11:22):
That's a good segue into the next scenario we want
to cover. And Bryan, you and I deal with this
all the time, all day every day. You know people
that are retiring, but the way their portfolio is constructured,
they're still living in the past like they're in their
thirties and forties. And here's what we mean by that.
A lot of folks, appropriately so, have been all growth
(11:42):
all the time in their four oh one k and
wealth building and accumulation years for good reason. That's where
all the great returns are. And you really don't care
about market pullbacks because you don't plan on taking any
money out, you know, in the short term, because you're
still working.
Speaker 3 (11:57):
Lo and Behold.
Speaker 2 (11:58):
These people get ready to retire, and some of them,
some of them have the mistaken notion that I can
just leave things as they are all growth all the time,
and they forget completely about something called sequence of return
risk that we talk about all the time on this show.
Speaker 3 (12:14):
And that's the issue of volatility.
Speaker 2 (12:16):
Volatility when you start to turn a portfolio into an
income stream, that can really draw down your return and
draw down your net worth. And it's something you really
have to sit down and run numbers and figure out
the right strategy from a risk standpoint, and maybe introduce
some and we never talk about getting people completely out
(12:36):
of growth, you know, but things like bond ladder portfolios
or maybe some buffered ETFs something to push in the
blow of short term volity. Volatility can really help, you know,
a hard somebody that's worked really hard and accumulated a
large amount of wealth for years, it can really help
them protect that wealth and create the income they need
(12:57):
to create at the same time.
Speaker 3 (12:59):
Here's the all Worth advice.
Speaker 2 (13:00):
The more complex your financial life becomes, the more important
it is to simplify your portfolio. Clarity leads to better decisions,
and better decisions lead to much better outcomes. There's a
new mortgage idea out there making headlines and it's raising
some eyebrows. Plus why one major financial CEO is warning
(13:21):
investors about a growing trend that blurs the line between
betting and investing.
Speaker 3 (13:27):
That's all coming up next.
Speaker 2 (13:28):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the Talk Station.
Speaker 1 (13:34):
The events of the day portle.
Speaker 4 (13:36):
On five declared War on Chicago are heard every day.
Speaker 2 (13:40):
Peace deal is closer than every piece fifty five KRC,
the Talk Station.
Speaker 6 (13:46):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, tax consultant,
or a state planning attorney to conduct your own due diligence.
Speaker 2 (14:05):
You're listening to Simply Money, presented by all Worth Financial
Bob Spondseller along with Brian James. If you can't listen
to Simply Money every night, subscribe and get our daily podcasts.
Just search Simply Money on the iHeart app or wherever
you find your podcast. Bufferdtf's bond Ladders ETF Overlap and
Generating Retirement Income with covered Calls, we're answering all of
(14:29):
your questions straight ahead of six forty three. A new
idea being proposed by President Trump is a fifty year mortgage,
and it's starting to gain some attention. The goal here
is to make monthly mortgage payments. More affordable, you know,
presumably for first time home buyers and folks just trying
to get into a home by stretching the loan term
(14:50):
from the traditional thirty years out to fifty years. Brian,
I've got some opinions on that, but I want to
know what you think here. Is this a good idea,
bad idea, or is it just all.
Speaker 3 (15:02):
For more flexibility to focus. I don't like this at all, Bob.
Speaker 4 (15:06):
I think this is just going to make people do
things that they really can't afford.
Speaker 3 (15:09):
I can't imagine.
Speaker 4 (15:10):
I mean, and granted, even though I have a fifty
year mortgage doesn't mean I have to stay in that
house for fifty years. I can always sell it. But
here's the problem. The problem is what will I have
built up? You know, people don't I don't know what
the average time in the house is, but I think
it's more like in the ten to twelve year timeframe
something like that, before the house gets too small, or
it's in the wrong neighborhood, or there's something else wrong
with it. So you know, I'm really I'm not a
(15:32):
fan of locking this in because remember how alone is amortized.
Maybe if they reversed amortized it right, more principal upfront
instead of the other way around like it normally works.
But you know, it's going to take a very very
long time for you to build up. It might take
thirty years to build up one hundred thousand dollars worth
of equity because of how long and how interest heavy
those early payments are going to be. It'll take forever
(15:54):
for that seesaw to move in the other direction where
you're really truly paying equity. You're paying mostly interest for
probably the first fifteen years of that mortgage. This isn't
even a third of the timeframe. Not a fan if
that wasn't clear.
Speaker 2 (16:06):
Yeah, it reminds me of you know what what evolved
with automobiles, you know, moving from buying a car and
paying it off maybe in three years, to just well
now we'll lease a car, or we'll stretch out the
payments to seven years. And you know, anytime you're get
we got to remember we're buying an asset here, We're
not buying a monthly payment. But in today's day and age,
(16:26):
everything is marketed as a monthly payment. And to your point, Brian,
with a fifty year mortgage, it's gonna take you a
long time to uh build up any positive equity in
that home, and you might as well just rent, you know.
And so it'd be interesting to compare the the payment
of buying a home with a fifty year mortgage versus
just renting a home and see what the difference.
Speaker 7 (16:48):
Is.
Speaker 2 (16:48):
But you know, also to your other point, if you
get if you have a job change or you gotta
you know, transfer and move to a different town, you know,
you're gonna you're gonna have to sell that home and
you're gonna have to pay that six percent you know,
fee to a real estate agent and other costs involved
in moving. You know, it's just again the advice here is,
don't buy something you can't afford just because someone can
(17:09):
make the monthly payment.
Speaker 4 (17:11):
Look at let me put it. Let me put a
dollar amount to that payment real quick. A typical mortgage.
Now that might cost twenty three hundred bucks on a
on a thirty year. If you move that to a
fifty year, you're dropping it to about twenty one hundred dollars.
So you're only saving a couple hundred bucks, and you're
tacking on an extra couple of decades worth of worth
of payments there, So it's.
Speaker 2 (17:30):
Well and not to you know, harp on this whole story,
you know, too long.
Speaker 3 (17:34):
But let's face it.
Speaker 2 (17:35):
You know, the banks are going to charge a higher
interest rate with a fifty year fixed mortgage than a
thirty year fixed more they have to, so they have.
Speaker 4 (17:43):
They have to protect themselves from from interest rate movements themselves.
They're locking themselves into something for half a century and
banks are not going to be super excited about doing that.
Speaker 3 (17:51):
All right. Another story we're following.
Speaker 2 (17:53):
The CEO of Charles Schwab is sounding the alarm over
what he says is the increasing overlap between gambling and
investing Brian. At a recent annual RIA or Registered Investment
Advisor conference for Schwab Advisors, CEO Rick Worster took the
stage and pointed out that younger investors just may not
(18:13):
distinguish anymore between placing a bet on a football game
or an election outcome versus allocating capital for long term investments.
In his own his in his own words and I quote,
he said, I just don't want young people in our
country to think gambling on a Monday night football game
is the same as investing in a stock and bond portfolio.
Speaker 4 (18:35):
Yeah, and this is being highlighted because a lot of
these brokerages brokerage firms out there, especially the newer, flashier ones,
are offering these prediction markets, which is basically prop bets
on any random is this going to happen? Is this
not going to happen type of a thing, And that's
not an investment, of course, that is a that's a
bet that lasts for a moment in time and it
either pays off or a dozen. But these broken firms
are making a lot of money off of this, so
(18:56):
of course it's going to get more and more obnoxious,
you know, and they're they're potentially hopefully using that revenue
to build or enhance these investment platforms. So what they're
doing ultimately is leveraging these gambling profits into more investment infrastructure.
I would hope that's gonna happen. I mean, that's kind
of the way it's being pitched. But at the same time,
we're the way we're doing this, you know, the the
(19:17):
for gamifying investing. Right, If we're just turning this into
a you know, a coin toss of in a moment
in time, then there's a risk that a lot of
people are gonna take what used to be a long term,
well constructed portfolio decision and make it more like a bet.
I'm gonna put put it this way for just a
little bit. If it doesn't work out in six months,
I'm gonna change it around. Rather than a disciplined asset allocation,
which should be the core of everyone's portfolio. I'm not
(19:38):
saying you shouldn't gamble, I'm not saying you shouldn't get
into crypto or these speculative type of things, but that's
not the core of your portfolio.
Speaker 3 (19:44):
That is not what you will retire on someday.
Speaker 2 (19:47):
Yeah, it'll be interesting to see how the SEC governs
this whole thing, if they do so at all.
Speaker 4 (19:52):
Think there's money coming out of the SEC right now? Well,
all right, that's a topic for another day.
Speaker 2 (19:57):
Here's the all Worth adviceiction markets as speculative bets, not
serious investments. Real wealth is built through discipline, purpose, and
long term strategy. You know, let's face it, you're investing
in the long term viability and growth of companies, not
just chasing headlines or short term outcomes. Coming up next,
(20:20):
how Google makes billions of dollars off of all of
us and how we can opt out. You're listening to
Simply Money, presented by all Worth Financial on fifty five
KRC the Talk station.
Speaker 1 (20:31):
Some people only hear what they want to hear in
the no twenty four hours a day, we only deal
in what you need to hear these days.
Speaker 3 (20:39):
You need to keep an open mind.
Speaker 1 (20:44):
On fifty five KRC Deed Talkstation.
Speaker 4 (20:48):
More than a few of our patients have talked to
me about iHeartRadio station.
Speaker 2 (20:55):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponsller along with Brian James, joined tonight by
our good friend, our cybersecurity and technology expert, mister Dave Hatter.
Speaker 3 (21:07):
Dave, thanks as always for carving out some time for
us tonight.
Speaker 2 (21:11):
And you've got a topic to discuss tonight that I
think everybody is going.
Speaker 3 (21:15):
To be interested in.
Speaker 2 (21:16):
And it's our good friend Google who's built their entire
business model to just make billions and billions of dollars
off of our personal information. And you've got some updates
here on how to actually opt.
Speaker 3 (21:30):
Out of this whole arrangement. Lay it on as Dave.
Speaker 7 (21:33):
Yeah, So, Google, which is now part of parent company
Alphabet makes an enormous amount of money off of your data,
and I'm not saying that's necessarily the various guys. You
just have to understand the model here. Some people call
it Savannah capitalism. And the bottom line is, whether it's Google, Meta,
Facebook's parent company, or other companies that deal primary in
(21:54):
your data, you are not the customer, you are the product.
Speaker 5 (21:57):
Right.
Speaker 7 (21:57):
If you're not paying with money, you're paying with data. Now,
again I'm not saying it's necessarily nefarius. You just need
to understand the trade off. And the good news is
there are privacy certainly options out there. I'll get to
that in a minute. But to give you some scale
of this, so Wired magazine did a really good video
that explains this in a lot of detail, and they
show some stats in here and says in twenty twenty four,
(22:18):
Google made nearly seventy five percent of their revenue off
of your data, things like YouTube and the videos you watch,
the Google Chrome, the Google search engine, Google advertised, all
that sort of stuff. These sell other products like Android
phones and such, but roughly seventy five percent of their
revenue is coming from your data. And you know they're
(22:41):
not looking to protect your privacy despite and you know,
wanted to side by side comparison that I encourage people
to do this all the time. If you go to
the Apple App store. You know, Apple a few years
ago caused a big shake up in the industry because
they started requiring people to want to deploy apps like
the Gmail app for your phone from Google for its sample,
or the Google Chrome browser or the Brave browser. They
(23:03):
made developers start putting it together what they call a
privacy label. Think of it like the nutrition label on
a can store that tells you the data they want
to collect. And I just encourage you go take a
look at the Google Gmail app or the Chrome app
versus like the Brave browser and see the amount of
data it collects and then ask yourself, well, why does
(23:25):
it need all of this incredibly sensitive and granted or
data about me to do X, y or Z. Now
how to say this ticktok. There's plenty of egregious examples
out there. That's one of the reasons why I'm not
a kiktok fan. But when you look at these things,
it starts to paint a real clear picture that you know,
you are their product. They're making enormous amounts of money
off of you. And my real issue with this is
(23:46):
not so much the money or the data, even if
it's how that data can be sold, used downstream and
out bet every one of you, and probably both of you,
have recently gotten a letter telling your data's been breached somewhere.
I just got my latest one of about nine now
from our good friends of TransUnion. You know, do I
do business with TransUnion, Not directly, but they're a credit
(24:08):
union or a credit bureau, so they have all my
data already, and now it's been leaked yet again. And
this is not helpful to you as a consumer. So
the point is, rather than continue to feed the monster
of these giant companies, the Metas of the world, the
Googles of the world, because again this isn't just a
Google slash alphabet issue. There are privately friendly options you
(24:29):
can use in many cases at low cost or free
that will provide I would argue functional parity, the same capabilities,
but are much more focused on your privacy. And now
you guys know I'm atential hack guy, but I encourage
every one of your listeners to start to think about
how can you disconnect from the machine and how can
you start to focus on limiting the amount of data
(24:51):
about you that's out there and still get the services
and features and functions you need.
Speaker 3 (24:56):
Hey, Dave, so's so.
Speaker 4 (24:57):
I think we're talking to a lot of people who
probably fell in love Google twenty five years ago when
it became so much better and when it was when
it became such an easy way to search and get
the information that you need, and then that kind of
sucked everybody into the vortex here a little bit. What
if if you've been doing that for years and your
data is all as out there, can you do anything
to unwine that.
Speaker 3 (25:15):
I remember, you know, discussions of the right to be
forgotten and all that kind of thing. Is that a
thing in the United States?
Speaker 4 (25:20):
Can I go back and tell them to forget everything
I've ever told them?
Speaker 7 (25:25):
Well, sort of, it's a good question. Like in Europe,
you've got the GDPR, the General Data Protection Regulation that's
got some very stringent privacy regulation. There's a hodgepodge quilt
of laws in the US. About nineteen states have some
kind of law. Californias is very stringent relatively speaking, and
it's tired of similar to the GDPR. You know, I
(25:46):
like to drive my good friends in Ohio to you know,
I live in Kentucky. Kentucky actually doesn't consumed the data
privacy law that goes into effect in January. It's not great,
but it's a lot better than nothing, which, unless something
has changed recently, is what you have in Ohio. So,
believe it or not, Kentucky can actually be to hire
to serve the useful, probably for the first time ever.
But that said, you know, it is hard. I mean,
(26:06):
you know, once your data is in any electronic form,
it's difficult to scrub. You can go around individually to
different companies and like gleat your browsing history, delete the
you know, the location tracking of of the maps apps
that you're using. You know, Google has the capability to
get in and see this stuff and turn it off,
which I have done, by the way, and I recommend
and in general I try to avoid using anything from Google.
(26:28):
You know your point though, I mean, Google is almost
synonymous with search. People don't say I'm going to go
search the internet or search the web. It's him going
to Google. Something I had literally become a verb. Despite
the fact that there are plenty of other more privacy
friendly search engines out there, like the Brave Start, the
Brave search engine, or the start page search engine. So
there there are many options, right, and again I'll come
(26:50):
back to those in a second. But to your point,
you know, there's no right to be forgotten per se.
Or you can just go out and say erase these
from all of this stuff. You can do it individually,
super time consuming, and in most cases they use dark
patterns to make it really difficult for you to even
figure out how to ask for it and then actually
say delete my stuff. There are private companies that claim
(27:12):
to do this. You pay them and they go out
and erase your data. Know about that. Again, it's not
in these companies interests to make it easy for you
to erase your data and or to stop the tracking,
because again that's where the bulk of their revenue comes from.
Speaker 2 (27:29):
All right, Dave, In the about a minute and a
half we got left, I'm going to ask a self
serving question here, just for my own gratification. I started
about a year ago using a search engine called Duck
Duck Go. For the reasons that you've already stated is
that one of the good ones does that keep me
more secure?
Speaker 7 (27:49):
Let's separate privacy and security very briefly, right, they're not
the same thing.
Speaker 2 (27:53):
Privacy, privacy, I meant to say privacy.
Speaker 7 (27:57):
Yeah, it's better. You know, there are so I put
together list, guys, and you know, if folks follow me
on social media LinkedIn or x in particular, I'm always
talking about this stuff, trying to share information. I put
a blog post together on LinkedIn. You can easily find it.
It's called my Privacy Friendly Personal Technology Stack, and I
send you guys a link to it. I'll post it
(28:18):
with the show notes and so forth tonight when you
guys put this out. But I've got a list of
all of the tools I use from a personal standpoint, right,
not business personal like I use proton email, I for
search engine, I like Brave Best, dut dot Go is
a better choice than Google than Google. Start page, and
you'll see in my notes here on the page anything
(28:39):
except Google web browser. You know, I use the Brave
browser or the Safari browser. I don't use Google Chrome.
So I've got a whole list of things here, my recommendations,
my personal choices. I encourage people to check it out
and start to make the ship.
Speaker 2 (28:53):
All right, this is great, you've already given us the
all worth advice for this segment. Follow Dave Hatter on
x or LinkedIn and take advantage of these free resources.
Speaker 3 (29:03):
He's putting out to everybody. Thanks so much, Dave.
Speaker 2 (29:06):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station.
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Speaker 2 (29:58):
You're listening to Simply Money all these financial I'm bobsun
seller along with Brian James.
Speaker 3 (30:04):
Do you have a financial question you'd like for us
to answer. There's a red button you can click while
you're listening. To the show.
Speaker 2 (30:09):
If you're listening to the show on the iHeart app,
simply record your question and it will come straight to us.
All right, Brian get ready for Chris in New Party says,
we built a solid ETF portfolio, but our advisor mentioned
something called tax drag from dividends and rebalancing. How do
you measure that and decide if it's even something significant
(30:30):
to worry about?
Speaker 4 (30:31):
Tax drag that can be known as the silent performance killer.
So what we're referring to here is exchange traded funds
that are held in a taxable account like a joint
account or a trust or individual. We're not referring to
iras roth IRA's four oh one ks that are all
tax deferred.
Speaker 3 (30:45):
So this this this stuff won't have as much of
an impact.
Speaker 4 (30:48):
But what's happening here is if you're getting a ten
ninety nine div or a ten ninety nine b off
your investments, and you likely are, because this is the
taxable activity that's happening. Each of those investments in their
spitz out some kind of a dividend, Maybe you sell
something at a profit or something like that that passes
through your ten ninety nine and you've got to pay
taxes on it. When you add up what you're shelling
out over from taxes, that can be a half a
(31:11):
percent of sometimes one and a half percent for a year.
And again I'm not talking about the taxes. I'm talking
about the hit that your performance takes. Because you're paying
taxes through your ten ninety nine. You're not going to
see this on your on your performance reports or anything
like that. You would have to really do some heavy duty,
serious math pulling in your own ten forty, which is
going to be different from everybody based on your own situation.
So for example, if that taxable account is earning maybe
(31:33):
six percent a year, but you're losing one percent or
more to taxes, that is a seventeen percent reduction in
net growth. We're not talking about a one percent reduction
seventeen percent, it's one percent out of six. So a
high yield ETFs or frequent rebalancing can push you into
these higher brackets you know, and trigger some state taxes too,
So make sure you know. We talk all the time
about asset location. If you've you've got types of investments
(31:55):
that are spitting out a lot of activity taxable activity,
you might want to sell out of the taxable account,
and if you really love it, go buy it in
an IRA or a rothe where that's not.
Speaker 3 (32:05):
Going to happen.
Speaker 4 (32:06):
Oh and for the ones that you do have in
those tax and those joint taxable accounts, use tax managed
ETFs or index funds that are going to minimize the
activity that causes that pain on your ten forty tax form.
All right, let's move on to Frank and Marryman. Frank
is I also got an ETF question. He says, they've
been pitched some buffer to et there's that p word, Bob,
we love. We've been pitched buffer to ETFs that limit
(32:27):
downside but cap the upside. What's the best way to
analyze whether this trade off is worth it protection versus growth?
Speaker 3 (32:34):
Well, a couple of ways. I want to answer this question, Frank.
Speaker 2 (32:36):
First of all, I think you should sit down with
your advisor, assuming you have one, and really quantify, you know,
with you and your spouse if you're married, what your
overall risk tolerance is, both from an emotional standpoint and
also you know what's going to work for your financial plan,
and those might be two different answers.
Speaker 3 (32:55):
And then you've got to reconcile those two answers.
Speaker 2 (32:57):
So there's an economic side of what your portfolio needs
to return and what it can sustain in the way
of downside volatility, and then there's that emotional component. You know,
how bad can things get before we pull the ripcord
and are prone to move to cash, which is never
a good idea. So that's the first thing. Then when
you get into evaluating each buffert etf you're going to
(33:18):
see the upside and the downside protection, and you and
your advisor can determine whether it's a good deal or not.
These things are built, you know, to have different caps
and different downside buffers. And again once you factor in
your overall risk profile and your time horizon for how
long you want that money invested. Usually those are a
(33:40):
couple steps to take to arrive at whether these things
make sense at all in your portfolio, how much of
your portfolio should be in them, and then what type
of product or strategy makes the most sense for you?
All right, Tim and Westchester says, we've built a bond
ladder that pays out of the next five years, but
if rates drop, should we extend now? Meaning the maturity
(34:02):
of those bonds are wait for the curve to shift.
Speaker 3 (34:05):
So let let's use a real example for this.
Speaker 4 (34:07):
So suppose you've got a five hundred thousand dollars bond ladder,
and right for those who may not know what that is,
let's pretend we've got one hundred thousand dollars coming due
in five different bonds. One the first one is a
one year bond, second is a two year bond, three, four,
and five. So we've always got money come and do
that will be reinvested on whatever the interest rates at
the time are, So you know, maybe maybe those aren't
about four point seven percent on average. I think that's
(34:29):
a pretty comfortable average for where we are right now
for a five year ladder. So if the Fed starts
cutting next year and those rates drop one full percentage point,
then the new bonds you're going to buy when the
short ones mature are going to be down to three
point seven percent. So on a one hundred thousand dollars investment,
you've just lost one thousand dollars less an annual income
every single year over five years. That's a potential five
(34:50):
to six thousand dollars. So if you extended, let's say
you extend part of your ladder out ten years today
at roughly four point three percent, you would lock that
income out even longer. So the key message here is
you don't have to bet the farm. Maybe extend twenty,
maybe thirty percent of your ladder now and keep the
rest short so that so that you can you still
have some liquidity, but you will have locked in some
(35:10):
rates now as they continue to decline over the next
few years.
Speaker 3 (35:14):
Hope that helps.
Speaker 4 (35:14):
And so now we're going to move on to John
in Sharonville, who's also got an ETF question. Lots of
ETFs ETFs on the minds today, with so many ETFs
tracking the same index as Bob, how do you know
which ones are really efficient and which ones are just
expensive duplicates, which ones are the copycats?
Speaker 2 (35:31):
Well, John, I think the first thing, assuming you know
we're talking about equal ets ets designed to do the
same things, I mean, the obvious answer here is look
at the internal operating expenses. If you've got a plane
Vanilla SMP five hundred index or a total US stock
market index, I mean, the underlying annual expenses should be
(35:51):
no more than ten basis points. And by the way,
a basis point means one to one hundreds of a
percent most of the time the ones that were able
to find, you know, for for clients, and I know
we're not the only people that use these. You ought
to be able to get a good large cap ETF
for I don't know, three to five base basis points
a year.
Speaker 3 (36:09):
So Number one, if if an.
Speaker 2 (36:12):
ETF is charging a whole lot more than that, you
got to look under the hood and say, why are
they doing anything to add value? Are they are they
deploying some tax loss harvesting in the background, are they
actively Is it really an actively managed ETF where they're
overweighting certain sectors or trying to even weight the S
and P five hundred from a cap standpoint instead of
(36:34):
just buying a cap wide and index. So you know,
compare the fees and if the fees are higher, say
why is the fee higher? And if you're not getting
any real value add there, it's a good time to
look at consolidation, all right. Coming up next, Brian has
his bottom line where he's going to talk about what
a financial plan even is and how do you know if.
Speaker 3 (36:54):
You actually have a financial plan. I'm looking forward to
this segment.
Speaker 2 (36:57):
You're listening to simply Money, presented by all Worth Financial
on fifty five KRC the Talk station.
Speaker 5 (37:03):
Let me tell you, so, the Internet is breeding evil,
breeding evil.
Speaker 1 (37:07):
And TikTok is the main culprit.
Speaker 5 (37:09):
And I don't know what's happening with TikTok, but that
damn thing needs to be sold now and it needs
to be cleaned up. And I don't want to hear
about free speech and everything else. It's a private company.
The company needs to clean it up because this is
crazy between the communist Chinese and all the crap that
people put.
Speaker 3 (37:25):
On this stuff.
Speaker 1 (37:25):
Mark Levin tonight at ten oh six on fifty five KRC,
the Talk station.
Speaker 2 (37:34):
You're listening to Simple Money if he's not about all
Worth Financial on Bob Sponseller along with Brian James. Brian,
what is a financial plan? And more importantly, how do
I know if I have one?
Speaker 4 (37:45):
Well, well, we're talking about with the financial plan is
it's not a pile of investments. I think that's where
most people start. If I just get a gigantic pile
of money, everything.
Speaker 3 (37:53):
Else will fall into place. Well, it doesn't work that.
Speaker 4 (37:55):
Way, but nearly half of US adults, according to recent studies,
say they do not have a written financial plan, and
about seventy percent feel confident they're going to meet their
financial goals, and that is down from eighty three percent
just a few years ago.
Speaker 3 (38:07):
People a little rattled nowadays.
Speaker 4 (38:08):
So at the same time, about thirty percent of adults
expect their their personal financial situation to be worse as
opposed to better. That is twice as high as it
was the prior year. So obviously there's a lot of
people worrying about it. About half of people say that
they worry every single day about some aspect of their
financial plan. So why does this matter. Well, if you
don't have a plan, you're likely to drift. You're going
(38:28):
to make reactive decisions based on emotion, overspend, undersaver, just
playing misopportunities because you're not looking closely enough.
Speaker 3 (38:35):
So what is right?
Speaker 4 (38:37):
What is a written financial plan? Well, let's make sure
we've defined our short term goals. What's the emergency fund?
Is it three to six months of expenses, nine to
twelve whatever works for you. Pay down your high interest debt.
Anything that has a double digit interest rate is on
the front burner. Don't ignore it, don't don't let those
amounts revolve. Those are short term goals. Beyond that, we
(38:57):
got medium term goals. You know, this is something you
might do over the next say, maybe three to five years.
Maybe it's a home purchase, somebody's wedding, you know, maybe
there's a vehicle coming up, Got to improve your house,
that kind of thing. Everything beyond that, that's a long
term goal. Important thing is you will have written all
these things down. So now we've got our short or
medium and our long term retirement goals. And then so
you know, then we're tracking our cash flow. Right, know
(39:19):
what comes in and what goes out. That's going to
tell you a lot about what your lifestyle is like
before you have to go down and go ahead and
write out a full budget, analyzing every dollar and how
much you spend at Applebee's on Saturday night or whatever.
You have some kind of lifestyle now and you can
see it in your checking account, in your credit card.
Figure out and understand what you're spending is like, and
make sure it's things that are important to you that
(39:40):
you want to do. And you might be able to
find some additional investing dollars if you don't have out there.
Speaker 3 (39:45):
So if we don't have this, right, if we don't
have a plan.
Speaker 4 (39:48):
Spend thirty minutes to draft one, right, Just think about
what we talked about. What am I and even focused
on just the short term goals. What's my emergency fund?
Speaker 3 (39:56):
What should it be? Are those assets in place now?
If not? How can I get them there? And then
look closely at your debt.
Speaker 4 (40:01):
You've got double digit credit cards out there. Blow those
up in the short run. That can be enough for
this week and then a couple of weeks from now.
Come back and think about the medium term and then
again the long term. You don't have to do all
of this at once. Make a commitment to review it
at least six to twelve months. Take a look at it.
Here's where I want it to be mine Now? Am
I there?
Speaker 3 (40:18):
Or if I'm not? What should I be doing? Differently?
Speaker 4 (40:20):
So, whether you're starting out, mid career, nearing retirement, these
same principles are going to apply.
Speaker 2 (40:24):
By Brian in a perfect world or an ideal world,
who should be preparing this kind of financial plan for you?
Speaker 4 (40:31):
What kind of advisor? What's the F word? A fiduciary, fiducier.
That's what I think, what you're thinking, that's where you're going.
Speaker 3 (40:38):
Nailed it all, right, Thanks for listening tonight.
Speaker 2 (40:40):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC the talk station.
Speaker 1 (40:46):
Some people only hear what they want to hear these days,
you need to keep an open mind. We only deal
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(41:08):
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Speaker 2 (00:15):
Tonight, cleaning up a portfolio mess, a somewhat blurred line
now between investing and gambling, and your questions get answered.
You're listening to Simple Money, presented by all Worth Financial
on Bob spond Seller along with Brian James.
Speaker 3 (00:29):
You've worked hard, you've.
Speaker 2 (00:30):
Saved and invested, but your portfolio might not be in
as good a place as possible, or might be somewhat
pack sufficient. Tonight, we're gonna walk through several scenarios or
examples of situations we run across from time to time
and attempt to clean some of those up with some
good advice.
Speaker 3 (00:49):
Ryan.
Speaker 2 (00:50):
Let's start off with scenario one, something we'll call the
Frankensign Frankenstein portfolio.
Speaker 3 (00:56):
Too many accounts and not nearly enough strategy.
Speaker 4 (01:00):
Just like the monster, this portfolio is made out of
the parts box, just a bunch of stuff bolted together
with really no strategy, no rhyme or reason in indicating
why things are there.
Speaker 3 (01:11):
So this is an investor who has done a pretty
good job saving.
Speaker 4 (01:13):
Obviously, you got to build that parts box somehow, maybe
rolled over some four O one k's open diras along
the way at tax time. Got a brokerage account here,
another brokege account over there, maybe a robo advisor, are
going to try that out for a little while, all
over the place, really nothing coordinated. The risk here is
that your investments are kind of overlapping and a lot
of unintentional overexposure because you might have the same thing
(01:33):
across all these accounts, and literally zero tax coordination. Because
of all these taxable type accounts, somebody has to be
paying attention to which one is doing what, or you
run the risk of wash sales and when you're trying
to tax loss harvest, as well as again redundant dividends
and things paying in more than one place, spinning out
multiple ten ninety nine, also often paying more and fees
(01:56):
or taxes than necessary. So for example, a fee based
account if you got that involved in those roboadvisor type accounts,
but generally the more that is managed there, the lower
that fee goes. So there's not a whole lot of
sense in scattering things all over the countryside. So the
fix here for this Frankenstein portfolio is to consolidate as
you can figure out where where the different accounts are
(02:17):
that are similarly titled. All of your I rays can
collapse into one, Your roth irays can collapse into one. Jointly,
taxable accounts or tax accounts that are individually titled all
can be lumped into one. And think about the whole
pile holistically, right, boil it down to specific goals, whether
that there might be retirement income, perhaps it's legacy planning,
or maybe it's just plain growth if you're in that
(02:38):
phase of life. Make sure that allocation across all of
them is intentional, not just a bunch.
Speaker 3 (02:43):
Of stuff all smushed together. So Bob tell us about this.
Speaker 2 (02:46):
There's a huge difference between having a collection of products
and having an actual investment and tax strategy. Huge difference.
Sometimes people feel like they're diversified. It feels great having
things spread out all over, you know, you know what's
half acre, but a lot of strategy can be lacking there,
and more importantly, a.
Speaker 3 (03:06):
Lot of opportunity.
Speaker 2 (03:07):
It's overlooked in those what we'll call Frankenstein portfolios.
Speaker 3 (03:11):
Didn't mean to interrupt, Brian.
Speaker 2 (03:13):
Let's move on to scenario number two, which is the
opposite of what we just talked about. That cash drag,
too much cash and again too little strategy. Talk about
what gets people into this cash drag situation.
Speaker 3 (03:26):
It's usually a windfall, Bob.
Speaker 4 (03:28):
So maybe somebody sold a business or inherited a lump sum.
Those are the two types of things that cause us
to receive a big pilot cash most frequently, or perhaps
there's lottery winners that kind of thing. These kinds of
things do happen to be out there, and oftentimes this
money lands in a bank account, which forces somebody to
make a decision that's different from my four oh one K,
my iras or whatever, where I had to make an
(03:50):
investment choice along the way, and that's been set for years,
if not decades. Well, is a pilot cast dropped out
of the sky. And the feeling that people tend to
get is, Okay, I need to protect this. This has
to be hoarded. I need to have that never had
this much cash in my life. I should sit on it.
And that's never going to be the right answer, right that.
The right answer is figure out what your needs are.
So because the more you have sitting in cash, the
(04:11):
more you're going to lose in purchasing power. I frequently
run into people who have this pile of cash, and
then their first complaint is about inflation, which nobody's happy
with inflation at the moment. But if you're consciously sitting
on a pile of cash and you're you're aware that
inflation is an issue, well, you are literally shooting yourself
in the foot because you are actually proactively pursuing the
(04:32):
problem that inflation is, which means the cost of things
outgrows your money, so you're missing out on market growth.
And also this does bring in emotional decision making. I've
got this pile of cash and I'm so scared to
lose any of it, so I shouldn't invest it.
Speaker 3 (04:44):
I should just sit on it.
Speaker 4 (04:45):
And we wind up with five times the amount we
actually need and something that is basically an emergency fund.
So what's the fix to this, Well, we want to
build a plan to redeploy that strategically. That can mean
once you've determined what's the right amount I should invest right,
and there's almost always things that's screaming for case, maybe
it is your emergency fund that has always needed some attention.
Figure out what that should be, carve it out. It's
(05:05):
perfectly fine for that to stay in cash or better
a high yield savings account, and then beyond that, figure
out what bills you have come and do over the
next twelve to twenty four months. If you're going to
have to buy a car, maybe do something to the house,
or there's a wedding coming up for a kid something
like that, well that's great. Put that in the CD
and timement for whatever whatever's left. Beyond that, figure out
the rest of it is just long term money. If
(05:27):
you can't identify a goal for it, it must therefore
be long term. Now you've figured out how much you
can invest, and you can decide how you want to
enter the market. Dollar cost averaging is a great way
if you're super concerned about getting in right before the
market takes a dip. Frequently that doesn't happen, so it
can be just as successful to go ahead and pull
the trigger on it. But again, figure out which job
each individual dollar has in there and act accordingly.
Speaker 3 (05:51):
All right, let's talk about a third scenario.
Speaker 2 (05:53):
When DYI turns into so os the do it yourself
for and we run into these kind of folks you know,
I won't say often, but once in a while, Brian
folks that have been managing their own money, maybe for decades,
and they've done well. They've stayed disciplined, they've stayed in
the market. Market's done well. We talk about that all
the time. But now the portfolio is a bit more complex.
(06:17):
Maybe you're nearing retirement, maybe you're staring at rmds coming
up missing out, or don't know how to properly evaluate
roth conversions. You know, sometimes these dy folks have zero
state planning considerations in their plan whatsoever. It's no longer
just about picking a few good mutual funds. Things have
(06:37):
gotten more complex as things have grown.
Speaker 3 (06:40):
And the risk here is just flat.
Speaker 2 (06:42):
Out missed planning opportunities, tax inefficiencies, emotional investing, staying tied
to things that maybe you inherited or just have owned
for forty years. And the fix here is considering at
least some professional management, at least a second set of eyes,
especially as your wealth grows. Small mistakes or small omissions
(07:04):
can get very, very expensive, and a good fiduciary advisor
can help you optimize across the board from a tax standpoint,
income strategy, charitable get giving, and legacy planning. And Brian,
what I want to add here, because I've had several
meetings like this over the last couple of years. Folks
come into our office or meet with, you know, let's
(07:25):
face it, other good fiduciary advisors here in our area,
and they come in with the assumption that you won't
work with me unless I hand over every penny of
my entire net worth, And that's not true. A good
fiduciary advisor will will add some of the planning opportunities
that we're talking about here and still giving clients the
(07:46):
opportunity to still self manage some of the money that
they want to continue to manage. And what I always
tell people at the beginning of a relationship is, hey,
let's date before we get married. Let's let us prove
to you, you know, the value add that we can add,
you know, to your situation by doing the comprehensive planning.
You don't have to hand it all over to us
(08:07):
at once. Let us earn our keep over time, and
let you be the judge on whether it makes sense
to continue to self manage some or all of your money.
But a second set of eyes here can really add
a ton of value to people's situation.
Speaker 4 (08:22):
Yeah, and I think going along with what we were
talking about earlier with the you know that holistic financial
planning approach. And I've had a meeting very recently with
somebody who's had a bit of a windfall and there's
an enormous amount of money that's kind of dropped out
of the sky from a from the sale of a business,
and they have never gotten around to doing any financial planning.
So all of a sudden, the simple will that they
(08:43):
didn't even have isn't enough for their estate plan. But
all there's a lot of dollars there that currently are
a little bit exposed because there's just nothing in place
should one of them get hit by bus. So we're
working on that right now. But that's how quickly life
is sneaking up on people.
Speaker 2 (08:56):
Let's let's get into this scenario that i'll call the
silent tax leak. You've got dividend paying funds, you know,
in taxable accounts. You've got no idea what tax loss
harvesting even is, to say nothing of having it deployed
in your portfolio. Maybe you're even triggering short term gains
without realizing it. And the risk here, obviously is you're
(09:17):
giving up more money to Uncle Sam than you need to,
not taking advantage of smart tax strategies. So obviously the
fix here is revisit your allocation. Put tax inefficient investments
in tax sheltered accounts like iras, use things like direct indexing,
maybe some municipal bonds or ets to reduce the tax
(09:39):
drag on your portfolio. In other words, be intentional about
when and what you sell to create the cash flow
and income that you need.
Speaker 3 (09:50):
Yeah, and so here's another one. Let's change the path
here a little bit too.
Speaker 4 (09:53):
So we talked about this a little bit before, inherited
wealth and inherited problems. So this is a scenario where
you didn't really have any.
Speaker 3 (10:01):
Control over what you own. It dropped out of the sky.
Speaker 5 (10:03):
You know.
Speaker 4 (10:03):
Maybe you've got a portfolio that grandma and grandpa had
and they've since passed on, and you've inherited those stocks
and those mutual funds and things in kind. Works great
for your parents or your grandparents, but it's not what
you would have picked. So this is where you got
to be kind of careful. People tend to sit on
this and they go, well, it's good enough for grandma
and grandpa. I'm gonna leave it alone for a little while.
And then I'll change it, and then what happens is
they'll they'll finally get around a couple of years later,
(10:25):
maybe later, maybe longer than that, to figuring out what
they want that portfolio look like for themselves. They could
have done that years ago when they had just received
they step up in cost basis, meaning they could have
pulled the trigger to rejigger that portfolio relatively quickly. But
now they've waited a few years and there are gains
packed into it, and maybe it's a super conservative portfolio
that they wouldn't have wanted to own because they are
(10:46):
a younger, more growth oriented investor.
Speaker 3 (10:48):
And that's great, that's fine.
Speaker 4 (10:50):
But now because they are a little bit of gains,
especially with the markets done over the last couple three years,
you're gonna have to pay taxes to make that mean
you still have a game.
Speaker 3 (10:57):
More money is just more money.
Speaker 4 (10:58):
But if that's one thing where I would urge people
to move a little more quickly when you inherit in
kind a bunch of investments, be thoughtful about earlier on
about what you want that to look like. Don't push
it out there. Just because it's already invested doesn't mean
it was invested for you. It was invested for someone
who is not around, and the situation doesn't exist anymore,
and if you let it go too long, it may
be a little more costly to rejigger it to what
(11:20):
you want to see.
Speaker 2 (11:22):
That's a good segue into the next scenario we want
to cover. And Bryan, you and I deal with this
all the time, all day every day. You know people
that are retiring, but the way their portfolio is constructured,
they're still living in the past like they're in their
thirties and forties. And here's what we mean by that.
A lot of folks, appropriately so, have been all growth
(11:42):
all the time in their four oh one k and
wealth building and accumulation years for good reason. That's where
all the great returns are. And you really don't care
about market pullbacks because you don't plan on taking any
money out, you know, in the short term, because you're
still working.
Speaker 3 (11:57):
Lo and Behold.
Speaker 2 (11:58):
These people get ready to retire, and some of them,
some of them have the mistaken notion that I can
just leave things as they are all growth all the time,
and they forget completely about something called sequence of return
risk that we talk about all the time on this show.
Speaker 3 (12:14):
And that's the issue of volatility.
Speaker 2 (12:16):
Volatility when you start to turn a portfolio into an
income stream, that can really draw down your return and
draw down your net worth. And it's something you really
have to sit down and run numbers and figure out
the right strategy from a risk standpoint, and maybe introduce
some and we never talk about getting people completely out
(12:36):
of growth, you know, but things like bond ladder portfolios
or maybe some buffered ETFs something to push in the
blow of short term volity. Volatility can really help, you know,
a hard somebody that's worked really hard and accumulated a
large amount of wealth for years, it can really help
them protect that wealth and create the income they need
(12:57):
to create at the same time.
Speaker 3 (12:59):
Here's the all Worth advice.
Speaker 2 (13:00):
The more complex your financial life becomes, the more important
it is to simplify your portfolio. Clarity leads to better decisions,
and better decisions lead to much better outcomes. There's a
new mortgage idea out there making headlines and it's raising
some eyebrows. Plus why one major financial CEO is warning
(13:21):
investors about a growing trend that blurs the line between
betting and investing.
Speaker 3 (13:27):
That's all coming up next.
Speaker 2 (13:28):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the Talk Station.
Speaker 1 (13:34):
The events of the day portle.
Speaker 4 (13:36):
On five declared War on Chicago are heard every day.
Speaker 2 (13:40):
Peace deal is closer than every piece fifty five KRC,
the Talk Station.
Speaker 6 (13:46):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, tax consultant,
or a state planning attorney to conduct your own due diligence.
Speaker 2 (14:05):
You're listening to Simply Money, presented by all Worth Financial
Bob Spondseller along with Brian James. If you can't listen
to Simply Money every night, subscribe and get our daily podcasts.
Just search Simply Money on the iHeart app or wherever
you find your podcast. Bufferdtf's bond Ladders ETF Overlap and
Generating Retirement Income with covered Calls, we're answering all of
(14:29):
your questions straight ahead of six forty three. A new
idea being proposed by President Trump is a fifty year mortgage,
and it's starting to gain some attention. The goal here
is to make monthly mortgage payments. More affordable, you know,
presumably for first time home buyers and folks just trying
to get into a home by stretching the loan term
(14:50):
from the traditional thirty years out to fifty years. Brian,
I've got some opinions on that, but I want to
know what you think here. Is this a good idea,
bad idea, or is it just all.
Speaker 3 (15:02):
For more flexibility to focus. I don't like this at all, Bob.
Speaker 4 (15:06):
I think this is just going to make people do
things that they really can't afford.
Speaker 3 (15:09):
I can't imagine.
Speaker 4 (15:10):
I mean, and granted, even though I have a fifty
year mortgage doesn't mean I have to stay in that
house for fifty years. I can always sell it. But
here's the problem. The problem is what will I have
built up? You know, people don't I don't know what
the average time in the house is, but I think
it's more like in the ten to twelve year timeframe
something like that, before the house gets too small, or
it's in the wrong neighborhood, or there's something else wrong
with it. So you know, I'm really I'm not a
(15:32):
fan of locking this in because remember how alone is amortized.
Maybe if they reversed amortized it right, more principal upfront
instead of the other way around like it normally works.
But you know, it's going to take a very very
long time for you to build up. It might take
thirty years to build up one hundred thousand dollars worth
of equity because of how long and how interest heavy
those early payments are going to be. It'll take forever
(15:54):
for that seesaw to move in the other direction where
you're really truly paying equity. You're paying mostly interest for
probably the first fifteen years of that mortgage. This isn't
even a third of the timeframe. Not a fan if
that wasn't clear.
Speaker 2 (16:06):
Yeah, it reminds me of you know what what evolved
with automobiles, you know, moving from buying a car and
paying it off maybe in three years, to just well
now we'll lease a car, or we'll stretch out the
payments to seven years. And you know, anytime you're get
we got to remember we're buying an asset here, We're
not buying a monthly payment. But in today's day and age,
(16:26):
everything is marketed as a monthly payment. And to your point, Brian,
with a fifty year mortgage, it's gonna take you a
long time to uh build up any positive equity in
that home, and you might as well just rent, you know.
And so it'd be interesting to compare the the payment
of buying a home with a fifty year mortgage versus
just renting a home and see what the difference.
Speaker 7 (16:48):
Is.
Speaker 2 (16:48):
But you know, also to your other point, if you
get if you have a job change or you gotta
you know, transfer and move to a different town, you know,
you're gonna you're gonna have to sell that home and
you're gonna have to pay that six percent you know,
fee to a real estate agent and other costs involved
in moving. You know, it's just again the advice here is,
don't buy something you can't afford just because someone can
(17:09):
make the monthly payment.
Speaker 4 (17:11):
Look at let me put it. Let me put a
dollar amount to that payment real quick. A typical mortgage.
Now that might cost twenty three hundred bucks on a
on a thirty year. If you move that to a
fifty year, you're dropping it to about twenty one hundred dollars.
So you're only saving a couple hundred bucks, and you're
tacking on an extra couple of decades worth of worth
of payments there, So it's.
Speaker 2 (17:30):
Well and not to you know, harp on this whole story,
you know, too long.
Speaker 3 (17:34):
But let's face it.
Speaker 2 (17:35):
You know, the banks are going to charge a higher
interest rate with a fifty year fixed mortgage than a
thirty year fixed more they have to, so they have.
Speaker 4 (17:43):
They have to protect themselves from from interest rate movements themselves.
They're locking themselves into something for half a century and
banks are not going to be super excited about doing that.
Speaker 3 (17:51):
All right. Another story we're following.
Speaker 2 (17:53):
The CEO of Charles Schwab is sounding the alarm over
what he says is the increasing overlap between gambling and
investing Brian. At a recent annual RIA or Registered Investment
Advisor conference for Schwab Advisors, CEO Rick Worster took the
stage and pointed out that younger investors just may not
(18:13):
distinguish anymore between placing a bet on a football game
or an election outcome versus allocating capital for long term investments.
In his own his in his own words and I quote,
he said, I just don't want young people in our
country to think gambling on a Monday night football game
is the same as investing in a stock and bond portfolio.
Speaker 4 (18:35):
Yeah, and this is being highlighted because a lot of
these brokerages brokerage firms out there, especially the newer, flashier ones,
are offering these prediction markets, which is basically prop bets
on any random is this going to happen? Is this
not going to happen type of a thing, And that's
not an investment, of course, that is a that's a
bet that lasts for a moment in time and it
either pays off or a dozen. But these broken firms
are making a lot of money off of this, so
(18:56):
of course it's going to get more and more obnoxious,
you know, and they're they're potentially hopefully using that revenue
to build or enhance these investment platforms. So what they're
doing ultimately is leveraging these gambling profits into more investment infrastructure.
I would hope that's gonna happen. I mean, that's kind
of the way it's being pitched. But at the same time,
we're the way we're doing this, you know, the the
(19:17):
for gamifying investing. Right, If we're just turning this into
a you know, a coin toss of in a moment
in time, then there's a risk that a lot of
people are gonna take what used to be a long term,
well constructed portfolio decision and make it more like a bet.
I'm gonna put put it this way for just a
little bit. If it doesn't work out in six months,
I'm gonna change it around. Rather than a disciplined asset allocation,
which should be the core of everyone's portfolio. I'm not
(19:38):
saying you shouldn't gamble, I'm not saying you shouldn't get
into crypto or these speculative type of things, but that's
not the core of your portfolio.
Speaker 3 (19:44):
That is not what you will retire on someday.
Speaker 2 (19:47):
Yeah, it'll be interesting to see how the SEC governs
this whole thing, if they do so at all.
Speaker 4 (19:52):
Think there's money coming out of the SEC right now? Well,
all right, that's a topic for another day.
Speaker 2 (19:57):
Here's the all Worth adviceiction markets as speculative bets, not
serious investments. Real wealth is built through discipline, purpose, and
long term strategy. You know, let's face it, you're investing
in the long term viability and growth of companies, not
just chasing headlines or short term outcomes. Coming up next,
(20:20):
how Google makes billions of dollars off of all of
us and how we can opt out. You're listening to
Simply Money, presented by all Worth Financial on fifty five
KRC the Talk station.
Speaker 1 (20:31):
Some people only hear what they want to hear in
the no twenty four hours a day, we only deal
in what you need to hear these days.
Speaker 3 (20:39):
You need to keep an open mind.
Speaker 1 (20:44):
On fifty five KRC Deed Talkstation.
Speaker 4 (20:48):
More than a few of our patients have talked to
me about iHeartRadio station.
Speaker 2 (20:55):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponsller along with Brian James, joined tonight by
our good friend, our cybersecurity and technology expert, mister Dave Hatter.
Speaker 3 (21:07):
Dave, thanks as always for carving out some time for
us tonight.
Speaker 2 (21:11):
And you've got a topic to discuss tonight that I
think everybody is going.
Speaker 3 (21:15):
To be interested in.
Speaker 2 (21:16):
And it's our good friend Google who's built their entire
business model to just make billions and billions of dollars
off of our personal information. And you've got some updates
here on how to actually opt.
Speaker 3 (21:30):
Out of this whole arrangement. Lay it on as Dave.
Speaker 7 (21:33):
Yeah, So, Google, which is now part of parent company
Alphabet makes an enormous amount of money off of your data,
and I'm not saying that's necessarily the various guys. You
just have to understand the model here. Some people call
it Savannah capitalism. And the bottom line is, whether it's Google, Meta,
Facebook's parent company, or other companies that deal primary in
(21:54):
your data, you are not the customer, you are the product.
Speaker 5 (21:57):
Right.
Speaker 7 (21:57):
If you're not paying with money, you're paying with data. Now,
again I'm not saying it's necessarily nefarius. You just need
to understand the trade off. And the good news is
there are privacy certainly options out there. I'll get to
that in a minute. But to give you some scale
of this, so Wired magazine did a really good video
that explains this in a lot of detail, and they
show some stats in here and says in twenty twenty four,
(22:18):
Google made nearly seventy five percent of their revenue off
of your data, things like YouTube and the videos you watch,
the Google Chrome, the Google search engine, Google advertised, all
that sort of stuff. These sell other products like Android
phones and such, but roughly seventy five percent of their
revenue is coming from your data. And you know they're
(22:41):
not looking to protect your privacy despite and you know,
wanted to side by side comparison that I encourage people
to do this all the time. If you go to
the Apple App store. You know, Apple a few years
ago caused a big shake up in the industry because
they started requiring people to want to deploy apps like
the Gmail app for your phone from Google for its sample,
or the Google Chrome browser or the Brave browser. They
(23:03):
made developers start putting it together what they call a
privacy label. Think of it like the nutrition label on
a can store that tells you the data they want
to collect. And I just encourage you go take a
look at the Google Gmail app or the Chrome app
versus like the Brave browser and see the amount of
data it collects and then ask yourself, well, why does
(23:25):
it need all of this incredibly sensitive and granted or
data about me to do X, y or Z. Now
how to say this ticktok. There's plenty of egregious examples
out there. That's one of the reasons why I'm not
a kiktok fan. But when you look at these things,
it starts to paint a real clear picture that you know,
you are their product. They're making enormous amounts of money
off of you. And my real issue with this is
(23:46):
not so much the money or the data, even if
it's how that data can be sold, used downstream and
out bet every one of you, and probably both of you,
have recently gotten a letter telling your data's been breached somewhere.
I just got my latest one of about nine now
from our good friends of TransUnion. You know, do I
do business with TransUnion, Not directly, but they're a credit
(24:08):
union or a credit bureau, so they have all my
data already, and now it's been leaked yet again. And
this is not helpful to you as a consumer. So
the point is, rather than continue to feed the monster
of these giant companies, the Metas of the world, the
Googles of the world, because again this isn't just a
Google slash alphabet issue. There are privately friendly options you
(24:29):
can use in many cases at low cost or free
that will provide I would argue functional parity, the same capabilities,
but are much more focused on your privacy. And now
you guys know I'm atential hack guy, but I encourage
every one of your listeners to start to think about
how can you disconnect from the machine and how can
you start to focus on limiting the amount of data
(24:51):
about you that's out there and still get the services
and features and functions you need.
Speaker 3 (24:56):
Hey, Dave, so's so.
Speaker 4 (24:57):
I think we're talking to a lot of people who
probably fell in love Google twenty five years ago when
it became so much better and when it was when
it became such an easy way to search and get
the information that you need, and then that kind of
sucked everybody into the vortex here a little bit. What
if if you've been doing that for years and your
data is all as out there, can you do anything
to unwine that.
Speaker 3 (25:15):
I remember, you know, discussions of the right to be
forgotten and all that kind of thing. Is that a
thing in the United States?
Speaker 4 (25:20):
Can I go back and tell them to forget everything
I've ever told them?
Speaker 7 (25:25):
Well, sort of, it's a good question. Like in Europe,
you've got the GDPR, the General Data Protection Regulation that's
got some very stringent privacy regulation. There's a hodgepodge quilt
of laws in the US. About nineteen states have some
kind of law. Californias is very stringent relatively speaking, and
it's tired of similar to the GDPR. You know, I
(25:46):
like to drive my good friends in Ohio to you know,
I live in Kentucky. Kentucky actually doesn't consumed the data
privacy law that goes into effect in January. It's not great,
but it's a lot better than nothing, which, unless something
has changed recently, is what you have in Ohio. So,
believe it or not, Kentucky can actually be to hire
to serve the useful, probably for the first time ever.
But that said, you know, it is hard. I mean,
(26:06):
you know, once your data is in any electronic form,
it's difficult to scrub. You can go around individually to
different companies and like gleat your browsing history, delete the
you know, the location tracking of of the maps apps
that you're using. You know, Google has the capability to
get in and see this stuff and turn it off,
which I have done, by the way, and I recommend
and in general I try to avoid using anything from Google.
(26:28):
You know your point though, I mean, Google is almost
synonymous with search. People don't say I'm going to go
search the internet or search the web. It's him going
to Google. Something I had literally become a verb. Despite
the fact that there are plenty of other more privacy
friendly search engines out there, like the Brave Start, the
Brave search engine, or the start page search engine. So
there there are many options, right, and again I'll come
(26:50):
back to those in a second. But to your point,
you know, there's no right to be forgotten per se.
Or you can just go out and say erase these
from all of this stuff. You can do it individually,
super time consuming, and in most cases they use dark
patterns to make it really difficult for you to even
figure out how to ask for it and then actually
say delete my stuff. There are private companies that claim
(27:12):
to do this. You pay them and they go out
and erase your data. Know about that. Again, it's not
in these companies interests to make it easy for you
to erase your data and or to stop the tracking,
because again that's where the bulk of their revenue comes from.
Speaker 2 (27:29):
All right, Dave, In the about a minute and a
half we got left, I'm going to ask a self
serving question here, just for my own gratification. I started
about a year ago using a search engine called Duck
Duck Go. For the reasons that you've already stated is
that one of the good ones does that keep me
more secure?
Speaker 7 (27:49):
Let's separate privacy and security very briefly, right, they're not
the same thing.
Speaker 2 (27:53):
Privacy, privacy, I meant to say privacy.
Speaker 7 (27:57):
Yeah, it's better. You know, there are so I put
together list, guys, and you know, if folks follow me
on social media LinkedIn or x in particular, I'm always
talking about this stuff, trying to share information. I put
a blog post together on LinkedIn. You can easily find it.
It's called my Privacy Friendly Personal Technology Stack, and I
send you guys a link to it. I'll post it
(28:18):
with the show notes and so forth tonight when you
guys put this out. But I've got a list of
all of the tools I use from a personal standpoint, right,
not business personal like I use proton email, I for
search engine, I like Brave Best, dut dot Go is
a better choice than Google than Google. Start page, and
you'll see in my notes here on the page anything
(28:39):
except Google web browser. You know, I use the Brave
browser or the Safari browser. I don't use Google Chrome.
So I've got a whole list of things here, my recommendations,
my personal choices. I encourage people to check it out
and start to make the ship.
Speaker 2 (28:53):
All right, this is great, you've already given us the
all worth advice for this segment. Follow Dave Hatter on
x or LinkedIn and take advantage of these free resources.
Speaker 3 (29:03):
He's putting out to everybody. Thanks so much, Dave.
Speaker 2 (29:06):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, the talk station.
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Kissing about every nation working on this deal.
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You're listening to Simply Money all these financial I'm bobsun
seller along with Brian James.
Speaker 3 (30:04):
Do you have a financial question you'd like for us
to answer. There's a red button you can click while
you're listening. To the show.
Speaker 2 (30:09):
If you're listening to the show on the iHeart app,
simply record your question and it will come straight to us.
All right, Brian get ready for Chris in New Party says,
we built a solid ETF portfolio, but our advisor mentioned
something called tax drag from dividends and rebalancing. How do
you measure that and decide if it's even something significant
(30:30):
to worry about?
Speaker 4 (30:31):
Tax drag that can be known as the silent performance killer.
So what we're referring to here is exchange traded funds
that are held in a taxable account like a joint
account or a trust or individual. We're not referring to
iras roth IRA's four oh one ks that are all
tax deferred.
Speaker 3 (30:45):
So this this this stuff won't have as much of
an impact.
Speaker 4 (30:48):
But what's happening here is if you're getting a ten
ninety nine div or a ten ninety nine b off
your investments, and you likely are, because this is the
taxable activity that's happening. Each of those investments in their
spitz out some kind of a dividend, Maybe you sell
something at a profit or something like that that passes
through your ten ninety nine and you've got to pay
taxes on it. When you add up what you're shelling
out over from taxes, that can be a half a
(31:11):
percent of sometimes one and a half percent for a year.
And again I'm not talking about the taxes. I'm talking
about the hit that your performance takes. Because you're paying
taxes through your ten ninety nine. You're not going to
see this on your on your performance reports or anything
like that. You would have to really do some heavy duty,
serious math pulling in your own ten forty, which is
going to be different from everybody based on your own situation.
So for example, if that taxable account is earning maybe
(31:33):
six percent a year, but you're losing one percent or
more to taxes, that is a seventeen percent reduction in
net growth. We're not talking about a one percent reduction
seventeen percent, it's one percent out of six. So a
high yield ETFs or frequent rebalancing can push you into
these higher brackets you know, and trigger some state taxes too,
So make sure you know. We talk all the time
about asset location. If you've you've got types of investments
(31:55):
that are spitting out a lot of activity taxable activity,
you might want to sell out of the taxable account,
and if you really love it, go buy it in
an IRA or a rothe where that's not.
Speaker 3 (32:05):
Going to happen.
Speaker 4 (32:06):
Oh and for the ones that you do have in
those tax and those joint taxable accounts, use tax managed
ETFs or index funds that are going to minimize the
activity that causes that pain on your ten forty tax form.
All right, let's move on to Frank and Marryman. Frank
is I also got an ETF question. He says, they've
been pitched some buffer to et there's that p word, Bob,
we love. We've been pitched buffer to ETFs that limit
(32:27):
downside but cap the upside. What's the best way to
analyze whether this trade off is worth it protection versus growth?
Speaker 3 (32:34):
Well, a couple of ways. I want to answer this question, Frank.
Speaker 2 (32:36):
First of all, I think you should sit down with
your advisor, assuming you have one, and really quantify, you know,
with you and your spouse if you're married, what your
overall risk tolerance is, both from an emotional standpoint and
also you know what's going to work for your financial plan,
and those might be two different answers.
Speaker 3 (32:55):
And then you've got to reconcile those two answers.
Speaker 2 (32:57):
So there's an economic side of what your portfolio needs
to return and what it can sustain in the way
of downside volatility, and then there's that emotional component. You know,
how bad can things get before we pull the ripcord
and are prone to move to cash, which is never
a good idea. So that's the first thing. Then when
you get into evaluating each buffert etf you're going to
(33:18):
see the upside and the downside protection, and you and
your advisor can determine whether it's a good deal or not.
These things are built, you know, to have different caps
and different downside buffers. And again once you factor in
your overall risk profile and your time horizon for how
long you want that money invested. Usually those are a
(33:40):
couple steps to take to arrive at whether these things
make sense at all in your portfolio, how much of
your portfolio should be in them, and then what type
of product or strategy makes the most sense for you?
All right, Tim and Westchester says, we've built a bond
ladder that pays out of the next five years, but
if rates drop, should we extend now? Meaning the maturity
(34:02):
of those bonds are wait for the curve to shift.
Speaker 3 (34:05):
So let let's use a real example for this.
Speaker 4 (34:07):
So suppose you've got a five hundred thousand dollars bond ladder,
and right for those who may not know what that is,
let's pretend we've got one hundred thousand dollars coming due
in five different bonds. One the first one is a
one year bond, second is a two year bond, three, four,
and five. So we've always got money come and do
that will be reinvested on whatever the interest rates at
the time are, So you know, maybe maybe those aren't
about four point seven percent on average. I think that's
(34:29):
a pretty comfortable average for where we are right now
for a five year ladder. So if the Fed starts
cutting next year and those rates drop one full percentage point,
then the new bonds you're going to buy when the
short ones mature are going to be down to three
point seven percent. So on a one hundred thousand dollars investment,
you've just lost one thousand dollars less an annual income
every single year over five years. That's a potential five
(34:50):
to six thousand dollars. So if you extended, let's say
you extend part of your ladder out ten years today
at roughly four point three percent, you would lock that
income out even longer. So the key message here is
you don't have to bet the farm. Maybe extend twenty,
maybe thirty percent of your ladder now and keep the
rest short so that so that you can you still
have some liquidity, but you will have locked in some
(35:10):
rates now as they continue to decline over the next
few years.
Speaker 3 (35:14):
Hope that helps.
Speaker 4 (35:14):
And so now we're going to move on to John
in Sharonville, who's also got an ETF question. Lots of
ETFs ETFs on the minds today, with so many ETFs
tracking the same index as Bob, how do you know
which ones are really efficient and which ones are just
expensive duplicates, which ones are the copycats?
Speaker 2 (35:31):
Well, John, I think the first thing, assuming you know
we're talking about equal ets ets designed to do the
same things, I mean, the obvious answer here is look
at the internal operating expenses. If you've got a plane
Vanilla SMP five hundred index or a total US stock
market index, I mean, the underlying annual expenses should be
(35:51):
no more than ten basis points. And by the way,
a basis point means one to one hundreds of a
percent most of the time the ones that were able
to find, you know, for for clients, and I know
we're not the only people that use these. You ought
to be able to get a good large cap ETF
for I don't know, three to five base basis points
a year.
Speaker 3 (36:09):
So Number one, if if an.
Speaker 2 (36:12):
ETF is charging a whole lot more than that, you
got to look under the hood and say, why are
they doing anything to add value? Are they are they
deploying some tax loss harvesting in the background, are they
actively Is it really an actively managed ETF where they're
overweighting certain sectors or trying to even weight the S
and P five hundred from a cap standpoint instead of
(36:34):
just buying a cap wide and index. So you know,
compare the fees and if the fees are higher, say
why is the fee higher? And if you're not getting
any real value add there, it's a good time to
look at consolidation, all right. Coming up next, Brian has
his bottom line where he's going to talk about what
a financial plan even is and how do you know if.
Speaker 3 (36:54):
You actually have a financial plan. I'm looking forward to
this segment.
Speaker 2 (36:57):
You're listening to simply Money, presented by all Worth Financial
on fifty five KRC the Talk station.
Speaker 5 (37:03):
Let me tell you, so, the Internet is breeding evil,
breeding evil.
Speaker 1 (37:07):
And TikTok is the main culprit.
Speaker 5 (37:09):
And I don't know what's happening with TikTok, but that
damn thing needs to be sold now and it needs
to be cleaned up. And I don't want to hear
about free speech and everything else. It's a private company.
The company needs to clean it up because this is
crazy between the communist Chinese and all the crap that
people put.
Speaker 3 (37:25):
On this stuff.
Speaker 1 (37:25):
Mark Levin tonight at ten oh six on fifty five KRC,
the Talk station.
Speaker 2 (37:34):
You're listening to Simple Money if he's not about all
Worth Financial on Bob Sponseller along with Brian James. Brian,
what is a financial plan? And more importantly, how do
I know if I have one?
Speaker 4 (37:45):
Well, well, we're talking about with the financial plan is
it's not a pile of investments. I think that's where
most people start. If I just get a gigantic pile
of money, everything.
Speaker 3 (37:53):
Else will fall into place. Well, it doesn't work that.
Speaker 4 (37:55):
Way, but nearly half of US adults, according to recent studies,
say they do not have a written financial plan, and
about seventy percent feel confident they're going to meet their
financial goals, and that is down from eighty three percent
just a few years ago.
Speaker 3 (38:07):
People a little rattled nowadays.
Speaker 4 (38:08):
So at the same time, about thirty percent of adults
expect their their personal financial situation to be worse as
opposed to better. That is twice as high as it
was the prior year. So obviously there's a lot of
people worrying about it. About half of people say that
they worry every single day about some aspect of their
financial plan. So why does this matter. Well, if you
don't have a plan, you're likely to drift. You're going
(38:28):
to make reactive decisions based on emotion, overspend, undersaver, just
playing misopportunities because you're not looking closely enough.
Speaker 3 (38:35):
So what is right?
Speaker 4 (38:37):
What is a written financial plan? Well, let's make sure
we've defined our short term goals. What's the emergency fund?
Is it three to six months of expenses, nine to
twelve whatever works for you. Pay down your high interest debt.
Anything that has a double digit interest rate is on
the front burner. Don't ignore it, don't don't let those
amounts revolve. Those are short term goals. Beyond that, we
(38:57):
got medium term goals. You know, this is something you
might do over the next say, maybe three to five years.
Maybe it's a home purchase, somebody's wedding, you know, maybe
there's a vehicle coming up, Got to improve your house,
that kind of thing. Everything beyond that, that's a long
term goal. Important thing is you will have written all
these things down. So now we've got our short or
medium and our long term retirement goals. And then so
you know, then we're tracking our cash flow. Right, know
(39:19):
what comes in and what goes out. That's going to
tell you a lot about what your lifestyle is like
before you have to go down and go ahead and
write out a full budget, analyzing every dollar and how
much you spend at Applebee's on Saturday night or whatever.
You have some kind of lifestyle now and you can
see it in your checking account, in your credit card.
Figure out and understand what you're spending is like, and
make sure it's things that are important to you that
(39:40):
you want to do. And you might be able to
find some additional investing dollars if you don't have out there.
Speaker 3 (39:45):
So if we don't have this, right, if we don't
have a plan.
Speaker 4 (39:48):
Spend thirty minutes to draft one, right, Just think about
what we talked about. What am I and even focused
on just the short term goals. What's my emergency fund?
Speaker 3 (39:56):
What should it be? Are those assets in place now?
If not? How can I get them there? And then
look closely at your debt.
Speaker 4 (40:01):
You've got double digit credit cards out there. Blow those
up in the short run. That can be enough for
this week and then a couple of weeks from now.
Come back and think about the medium term and then
again the long term. You don't have to do all
of this at once. Make a commitment to review it
at least six to twelve months. Take a look at it.
Here's where I want it to be mine Now? Am
I there?
Speaker 3 (40:18):
Or if I'm not? What should I be doing? Differently?
Speaker 4 (40:20):
So, whether you're starting out, mid career, nearing retirement, these
same principles are going to apply.
Speaker 2 (40:24):
By Brian in a perfect world or an ideal world,
who should be preparing this kind of financial plan for you?
Speaker 4 (40:31):
What kind of advisor? What's the F word? A fiduciary, fiducier.
That's what I think, what you're thinking, that's where you're going.
Speaker 3 (40:38):
Nailed it all, right, Thanks for listening tonight.
Speaker 2 (40:40):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC the talk station.
Speaker 1 (40:46):
Some people only hear what they want to hear these days,
you need to keep an open mind. We only deal
in what you need to hear. Everybody needs the truth
of the facts. You need the information that matters. We
need to know if there were warning signs. You need
it around the clock today, tomorrow, and for the rest
of life. In the no twenty four hours a day.
You don't need to go anywhere else. And that's something
(41:08):
that people already know for certainly hundredifty five KRZZ Talk Station.
Speaker 3 (41:17):
This is the time of the year most of us
are
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